Step 6: Final Payment Instruction
The final payment instruction is routed through both IPSs
At this point in the process:
- An FX quote has been locked in for this payment
- The Destination Account has been confirmed to be active and able to receive payments (dependent on the functionality available in the Destination Country)
- The Sender has had the opportunity to confirm that the account belongs to the person they expect to pay, through the Confirmation of Payee functionality
- The Source Bank, Destination Bank and Liquidity Providers have all completed sanctions screening and either approved the payment to go ahead or specified further information that the Source Bank should include in the final payment instruction.
Now the Source Bank can initiate the final payment instruction, which initiates the transfer of funds.
The process is split into several distinct parts:
- In the first leg, the payment is settled in the Source IPS:
- Source Bank sends the payment instruction to Source IPS (1).
- Source IPS debits the Source Bank and credits the Source Liquidity Provider (A), and notifies the Source Liquidity Provider (2).
- Source IPS recognises the payment as a Nexus payment, and notifies the Source Gateway that Leg 1 is complete (3).
- The Source Gateway then sends the payment instruction to the Destination Gateway (4).
- The Destination Gateway then optionally (depending on the setup of the FX Provider and its Liquidity Providers) asks the Destination Liquidity Provider to confirm that the FX Provider has sufficient funds to cover the payment (5).
- The Destination Gateway then initiates the second leg of the payment at the Destination IPS (6):
- The Destination IPS debits the Destination Liquidity Provider and credits the Destination Bank (D).
- The Destination IPS notifies the Destination Liquidity Provider (7) and Destination Bank (8) that the transaction is complete.
- Destination Bank informs the Recipient (9) that they have received funds.
- Destination IPS informs the Destination Gateway that Leg 2 is complete.
- Destination Gateway informs the Source Gateway, who informs the Source Bank.
- The Source Bank can now inform their Sender that the payment is complete (10).
- Finally, the FXP is informed by the Source Gateway that the payment is complete (11). They may also be separately updated of their account balances by the Source and Destination Liquidity Providers. (B and C represent the updates to the FX Provider’s balances with Source and Destination Liquidity Providers).
The Destination Bank is responsible for immediately crediting the Recipient with funds. In practice this means that the payment should be visible on the Recipient’s statement and the funds should be available for them to spend.
The Source Bank is responsible for immediately notifying the Sender that this payment was successfully completed. It is up to the Source Bank to choose how to do this, but the Sender should be able to establish with certainty that the payment is complete.
The Source Gateway will keep a record of the payment as it is processed, in order to facilitate the correct processing of potential payment reversals. (These records must be kept for at least as long as it is possible to issue a recall request or dispute against a payment.)
Triggered by final payment instruction sent to Source IPS
ISO 20022 Equivalent messages
The messages between the banks and the IPS are based on the local standards. The messages between the Nexus Gateways are based on the ISO20022 standard, where:
- PaymentInstructionReq = pacs.008
- PaymentInstructionAck = pacs.002